{"id":37867,"date":"2023-03-17T10:58:46","date_gmt":"2023-03-17T08:58:46","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37867"},"modified":"2025-08-29T22:43:30","modified_gmt":"2025-08-29T19:43:30","slug":"what-is-margin-trading","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/what-is-margin-trading\/","title":{"rendered":"What is margin trading?"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Key points<\/h2>\n<ul class=\"wp-block-list\">\n<li>Margin trading is spot trading with borrowed funds. A trader pledges their own assets\u2014margin\u2014as collateral. For using borrowed capital, they pay an hourly interest charge.<\/li>\n<li>Margin lets users increase purchasing power and potential gains from rising prices, and also profit from falling cryptocurrency prices.<\/li>\n<li>Margin ensures the client meets debt obligations under the exchange\u2019s rules, with the exchange acting as an intermediary between borrowers and lenders.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What is leverage?<\/h2>\n<p>Leverage is the ratio of borrowed funds to margin. In crypto markets it ranges from 2x to 100x.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"760\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/image3-192-1024x760.png\" alt=\"\u0418\u043d\u0442\u0435\u0440\u0444\u0435\u0439\u0441 \u0442\u043e\u0440\u0433\u043e\u0432\u043e\u0439 \u043f\u0430\u0440\u044b \u0434\u043b\u044f \u043c\u0430\u0440\u0436\u0438\u043d\u0430\u043b\u044c\u043d\u044b\u0445 \u0441\u0434\u0435\u043b\u043e\u043a \u0441 \u043f\u043b\u0435\u0447\u043e\u043c\" class=\"wp-image-201351\" title=\"\u0422\u043e\u0440\u0433\u043e\u0432\u043b\u044f \u0441 \u043f\u043b\u0435\u0447\u043e\u043c \u043d\u0430 \u043a\u0440\u0438\u043f\u0442\u043e\u0440\u044b\u043d\u043a\u0435\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/image3-192-1024x760.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/image3-192-300x223.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/image3-192-768x570.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/image3-192-1536x1140.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/image3-192.png 1676w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Exchanges display available leverage next to the trading pair. For <a class=\"tracking_link\" href=\"https:\/\/www.coinex.com\/s\/4S9R\" target=\"_blank\" rel=\"noopener\">CET\/USDT<\/a> on CoinEx it is 3x.<\/figcaption><\/figure>\n<p>Trading with 10x leverage means that with a 1,000 USDT deposit a trader can borrow 9,000 USDT and open a position of up to 10,000 USDT.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What are a margin call and liquidation?<\/h2>\n<p>Margin call and liquidation are safeguards used by exchanges to prevent borrower defaults and lender losses.<\/p>\n<p>A margin call is the broker\u2019s request to add collateral to restore coverage for open positions. It arises when the trader\u2019s margin level enters a risk zone, computed for each pair depending on <span data-descr=\"an indicator that shows the market\u2019s ability to absorb large trading volumes without significant price changes\" class=\"old_tooltip\">market depth<\/span> and trading volume.\u00a0<\/p>\n<p>Liquidation is the forced closure of a position when the loss is close to the posted margin.<\/p>\n<p>When the risk zone is reached, the trader receives a pop-up or an email recommending an additional deposit. If they ignore it and the price moves further against the position, the exchange liquidates it.<\/p>\n<p>The trader can close the trade before liquidation\u2014manually or with a <span data-descr=\"an order that automatically closes a position when the asset\u2019s price reaches a specified level\" class=\"old_tooltip\">stop-loss<\/span>. In that case only part of the margin is lost.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What are cross margin and isolated margin?<\/h2>\n<p>Cross margin and isolated margin are modes of using collateral. With the former, all funds on the account back all open positions; with the latter, a set amount backs each trade.<\/p>\n<p>With cross margin, profit from one trade can offset losses in others. Conversely, one losing trade can cause all open positions to be liquidated.<\/p>\n<p>With isolated margin, liquidation of a given trade does not affect other positions.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What is the index price in margin trading?<\/h2>\n<p>The index price is a weighted average price of an asset based on data from several markets. Exchanges use it to minimise price manipulation.<\/p>\n<p>Binance calculates price indices for instruments using data from Huobi, OKX, Bittrex, HitBTC, Gate.io, BitMEX, MXC, Bitfinex, Coinbase, Bitstamp, Kraken, Binance.US and Bybit.<\/p>\n<p>CoinEx, in turn, computes these values using data from Binance, Huobi Global, KuCoin and Gate.io.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"906\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/image1-570-1024x906.png\" alt=\"\u0418\u043d\u0434\u0435\u043a\u0441\u043d\u0430\u044f \u0446\u0435\u043d\u0430 BTC\/USDT \u043d\u0430 \u0431\u0438\u0440\u0436\u0435 \u043a\u0440\u0438\u043f\u0442\u043e\u0432\u0430\u043b\u044e\u0442 CoinEx\" class=\"wp-image-201398\" title=\"\u0418\u043d\u0434\u0435\u043a\u0441\u043d\u0430\u044f \u0446\u0435\u043d\u0430 \u0432 \u043c\u0430\u0440\u0436\u0438\u043d\u0430\u043b\u044c\u043d\u043e\u0439 \u0442\u043e\u0440\u0433\u043e\u0432\u043b\u0435\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/image1-570-1024x906.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/image1-570-300x265.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/image1-570-768x679.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/image1-570-1536x1359.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/image1-570.png 1648w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Each trading venue carries a 25% weight in CoinEx\u2019s <a class=\"tracking_link\" href=\"https:\/\/www.coinex.com\/exchange\/margin\/index-price?market=BTCUSDT\" target=\"_blank\" rel=\"noopener\">BTCUSDT<\/a> index-price calculation.<\/figcaption><\/figure>\n<p>When the index price moves beyond a set range during bouts of high volatility, the exchange warns users of elevated liquidation risk.<\/p>\n<p>If one venue is under maintenance and\/or its latest trade-price and volume feeds fail, CoinEx temporarily excludes it from the calculation and rebalances the weights.<\/p>\n<p>When placing a stop-loss, you can choose the index price as the trigger. This helps avoid losses caused by local price swings on a single venue.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How to profit from a long trade on margin?<\/h2>\n<p>A long, or long position, is buying an asset in anticipation of a rise. Leverage increases potential profit from the subsequent sale.<\/p>\n<p><strong>Example: <\/strong>a trader expects bitcoin to rise from 15,000 USDT to 25,000 USDT.<\/p>\n<p>They top up a margin account with 3,000 USDT and borrow 12,000 USDT on CoinEx to trade with 5x leverage. The borrowing rate is 0.15% per day.<\/p>\n<p>The trader buys bitcoin for 15,000 USDT and sells the coins ten days later when the price reaches 25,000 USDT.<\/p>\n<p>Net profit:<\/p>\n<p class=\"has_formula\">proceeds from selling 1 BTC (25,000 USDT) \u2014 debt to the exchange (12,000 USDT) \u2014 interest on borrowed funds (180 USDT) \u2014 the trader\u2019s initial capital (3,000 USDT) = <strong>9,820 USDT<\/strong>.<\/p>\n<p>Profit from a similar trade without leverage would be:<\/p>\n<figure class=\"wp-block-table has_formula\">\n<table>\n<tbody>\n<tr>\n<td>proceeds from selling 0.2 BTC (5,000 USDT) \u2014 the trader\u2019s initial capital (3,000 USDT) = <strong>2,000 USDT<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How to profit from a short trade on margin?<\/h2>\n<p>A short, or short position, is selling an asset with the aim of buying it back at a lower price. Profiting from falling prices requires margin trading.<\/p>\n<p><strong>Example:<\/strong> a trader expects bitcoin to drop from 25,000 USDT to 15,000 USDT.<\/p>\n<p>They buy 0.2 BTC at the current price and borrow 0.8 BTC on CoinEx to trade with 5x leverage. The borrowing rate is 0.1% per day.<\/p>\n<p>The trader sells 1 BTC and receives 25,000 USDT. Ten days later the price falls to 15,000 USDT and they buy 0.8 BTC to repay the debt.<\/p>\n<p>Net profit:<\/p>\n<figure class=\"wp-block-table has_formula\">\n<table>\n<tbody>\n<tr>\n<td>proceeds from selling 1 BTC at 25,000 USDT (25,000 USDT) \u2014 purchase of 0.8 BTC at 15,000 USDT to repay the debt (12,000 USDT) \u2014 initial cost of 0.2 BTC (5,000 USDT) \u2014 interest on borrowed funds (120 USDT) =<strong> 7,880 USDT<\/strong>.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How to start trading with leverage?<\/h2>\n<p>First choose an exchange that supports margin trading. These include Binance, Coinbase Pro, Huobi, Bitfinex, Kraken, CoinEx and others.<\/p>\n<p>On CoinEx only isolated margin is available. To proceed:<\/p>\n<ol class=\"wp-block-list\">\n<li><a class=\"tracking_link\" href=\"https:\/\/www.coinex.com\/s\/4S9X\" target=\"_blank\" rel=\"noopener\">Register<\/a> and activate your account.<\/li>\n<li>Make a deposit.<\/li>\n<li>Choose a pair for margin trading and transfer assets to the corresponding account.<\/li>\n<li>Select trade direction \u2014 <a href=\"https:\/\/forklog.com\/en\/news\/shorts-and-longs-in-crypto-what-they-are-and-how-to-use-them\">long or short<\/a>.<\/li>\n<li>Wait for an entry point and borrow funds.<\/li>\n<li>Trade the chosen asset.<\/li>\n<li>Repay the broker.<\/li>\n<\/ol>\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/image2-356-1024x642.png\" alt=\"\u041f\u043e\u043f\u043e\u043b\u043d\u0435\u043d\u0438\u0435 \u043c\u0430\u0440\u0436\u0438\u043d\u0430\u043b\u044c\u043d\u043e\u0433\u043e \u0441\u0447\u0435\u0442\u0430 \u043d\u0430 \u0431\u0438\u0440\u0436\u0435 \u043a\u0440\u0438\u043f\u0442\u043e\u0432\u0430\u043b\u044e\u0442\" class=\"wp-image-201447\" width=\"820\" height=\"514\" title=\"\u041a\u0430\u043a \u0442\u043e\u0440\u0433\u043e\u0432\u0430\u0442\u044c \u0441 \u043f\u043b\u0435\u0447\u043e\u043c\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/image2-356-1024x642.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/image2-356-300x188.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/image2-356-768x481.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/image2-356-1536x963.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/image2-356.png 1999w\" sizes=\"auto, (max-width: 820px) 100vw, 820px\" \/><figcaption>Funding a margin account. CoinEx offers <a class=\"tracking_link\" href=\"https:\/\/www.coinex.com\/asset\/margin\" target=\"_blank\" rel=\"noopener\">134 pairs<\/a> for leveraged trading.<\/figcaption><\/figure>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What is a margin insurance fund?<\/h2>\n<p>A margin insurance fund is capital the exchange uses to cover clients\u2019 losses in margin trading.<\/p>\n<p>CoinEx <a class=\"tracking_link\" href=\"https:\/\/www.coinex.com\/exchange\/margin\/insurance-fund?coin=USDT\" target=\"_blank\" rel=\"noopener\">allocates<\/a> liquidation fees and 30% of crypto\u2011lending income to the fund. If, after liquidation, a trader\u2019s balance turns negative, CoinEx uses the fund to repay the debt.<\/p>\n<p>If the fund lacks sufficient reserves at that moment, CoinEx advances the remaining part of the debt. However, the user will not be able to withdraw funds from the main account.<\/p>\n<p>To settle the outstanding obligation, the trader must add funds to the margin account or wait until the fund holds enough to repay all debts in chronological order. After repayment, withdrawals are restored.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Advantages of leveraged margin trading<\/h2>\n<p>With leverage you can:<\/p>\n<ul class=\"wp-block-list\">\n<li>trade across markets in several assets thanks to larger working capital;<\/li>\n<li>reach financial goals faster than with comparable spot trading without leverage;<\/li>\n<li>enjoy unlimited potential profit\u2014the exchange does not trigger <span data-descr=\"forced reduction of positions with high leverage and large unrealised profits to prevent the insurance fund from going bankrupt\" class=\"old_tooltip\">auto-deleveraging<\/span> as on the futures market.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Risks of trading with leverage<\/h2>\n<ul class=\"wp-block-list\">\n<li>With leverage, losses can reach 100% or more of the deposit.<\/li>\n<li>The strategy is particularly risky during periods of high volatility.<\/li>\n<li>Technical problems on the trading platform can lead to order\u2011execution delays and loss of funds.<\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What margin trading, leverage and margin calls are.<\/p>\n","protected":false},"author":1,"featured_media":37868,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"2","news_style_id":"1","cryptorium_level":"2","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[1425,1267],"class_list":["post-37867","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-coinex","tag-cryptocurrency-trading"],"aioseo_notices":[],"amp_enabled":true,"views":"105","promo_type":"2","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37867","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37867"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37867\/revisions"}],"predecessor-version":[{"id":37869,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37867\/revisions\/37869"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37868"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37867"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}